Daily Market Update

U.S. Dollar ending 2018 on the down side

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The U.S. Dollar is worse this morning following very wild swings in global stocks, which have had their worst year since 2008.

Overview

Along with the uncertainty and volatility of markets, the greenback seems to be ready to close the year on a weak note based on concerns over the current government shutdown. Per the Bloomberg Dollar Spot Index, the buck is at its lowest point in seven weeks against its ten major counterparts.

No solution to the impasse in government seems ready for the next few days, thus we will come into 2019 looking for answers to the spending bill and other items. We forecasted this period of downfall for the greenback, based on similar factors and context that played out at the end of last year. Consumer Confidence is down and Housing markets worries are arising, which may cause further losses for the dollar ahead. The focus is now entirely on our situation here and how the buck can prevail in the midst of trading and political battles.

What to Watch Today…

EUR

The euro is trading at its best levels in over five weeks, benefitting mostly from weakening of the dollar’s overall value in the face of challenges. While political and economic problems arose in 2018, the shared currency is on a recovery path as December delivered the much-awaited end to the quantitative easing program by the European Central Bank.

Additionally, issues regarding the Italian budget reached a resolution, even though not a perfect one. Inflationary measures in Germany as CPI and Gross Domestic Product numbers from Spain also came in slightly better than expected for the month as well as quarter. No major resurgence is guaranteed, but we do see Euro having better fortunes in Q1 2019.

JPY

The Yen is on a major winning streak since December 13th, having picked up 3.0% in value against the buck primarily as a result of havoc across global markets. Indeed, the safe-haven role that Yen tends to play is back in a big way as trade conflicts, government shutdown, and challenges to the status quo are dampening them outlook for worldwide growth.

Japan’s situation is not ideal however. A rapidly rising aging population, little progress in population growth (if any), and scandals involving leadership with accusations of corruption have kept the economy from growing much as it has started to show contraction GDP-wise. Deflationary pressures are still there and ambivalence over monetary tightening provides little hope that the Bank of Japan will feel comfortable adding to borrowing costs by raising rates. For now, tumbling markets will feed the currency, but worries over Japan itself remain.

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